By Azania Post Reporter
TANZANIA joins other countries in the world to attend in the annual meeting of the boards of governor of the World Bank Group (WBG) scheduled to start today in Washington DC, United States of America.
According to WB, the meetings bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern.
Other issues to be discussed are world economic outlook, poverty eradication, economic development, and aid effectiveness.
Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world's financial system.
Narrating about Tanzania, the WB says the country has sustained relatively high economic growth over the last decade, averaging 6–7% a year. But while its poverty rate has declined, its absolute number of poor has not because of its high population growth rate.
At 7%, in 2016, Tanzania’s economy expanded quickly, putting it close to the top of the fastest growing economies in Sub-Saharan Africa. This expansion softened during the last quarter of 2016, however, and continued to do so into 2017.
Since coming to office, President John Magufuli has reoriented public expenditure toward development spending, reducing recurrent expenditure significantly, and intensifying efforts to mobilize domestic revenue.
Government spending was cut back, and a cap put in place on the salaries of executive officers. Measures were introduced to control tax exemptions.
WB says at 5.2 percent , the inflation rate has remained low and close to the Government’s medium-term target of 5%. This recent decline in headline inflation (from March/April’s 6.4%) has been driven by lower food and energy prices.
The current account deficit also declined to about US$1.5 billion (equivalent to 3.1% of GDP) in June 2017, from about US$1.9 billion (equivalent to 4.2% of GDP) in June 2016. The value of exports dropped by 6.2% in the year ending June 2017, compared to the year ending June 2016, while the value of imports dropped by 16.7% over the same period.
In an attempt to boost growth in credit to the private sector and ease tight liquidity, the Bank of Tanzania reduced the discount lending rate from 16% to 12% in March 2017, and followed it with another reduction to 9% in August 2017.
Response has been limited, with the growth of credit to the private sector still very low at 2.8% in June 2017. Interest rates have remained significantly higher.
The fiscal deficit declined to 3% of GDP, its lowest level over the past seven years. This resulted from increased domestic revenue mobilization and controlled recurrent expenditures. The level of payment arrears remained unsustainably high, at about 6% of GDP by June 2017.
This includes arrears to suppliers to the central government, as well as suppliers to TANESCO and pension funds. Despite the Government’s effort to verify and clear payments to its suppliers, the emergence of new arrears has meant that the level of debt to suppliers has remained high at about 2% of GDP.